Stagnating collectively is the new norm

Of the 2,000-plus words in President Obama’s second inaugural address, surely the most provocative were “collective action.”

He presented American history as a “journey,” during which, at every crucial turn, we discovered “together” that “preserving our individual freedoms ultimately requires collective action.”

His examples were efforts led by the federal government: interstate highways, financial regulation, the New Deal-Great Society safety net and victory in war.

What would Mancur Olson have made of this? The late University of Maryland economist wrote a book called “The Logic of Collective Action,” which, though first published in 1965, still provides a powerful counterpoint to the vision Obama laid out.

Olson’s critique of collective action is complicated, and it is made less accessible by an ungainly prose style. But the gist is that large numbers of people do not naturally band together to secure common interests. In fact, the larger the group, the less likely it is to act in a truly collective manner.

As Olson explained, the interests that unite large groups are necessarily of the lowest-common-denominator variety. Therefore the concrete benefits of collective action to any individual are usually small compared with the costs — in time, effort and money — of participation. “Free-riding” is a constant threat — as the difficulties of collecting union dues illustrates.

By contrast, small groups are good at collective action. It costs less to organize a few people around a narrow, but intensely felt, shared concern. For each member, the potential benefits of joint action are more likely to outweigh the costs, whether or not success comes at the larger society’s expense.

Hence, the housing lobby, the farm lobby and all the special-interest groups that swarm Congress. Hence, too, the conspicuous absence of an effective lobby on behalf of all taxpayers or, for that matter, all poor people.

So when Obama called on Americans to once again act “as one nation, and one people,” he was, at best, stating an aspiration.

Olson’s assessment of reality, both historical and contemporary, is less lofty but more accurate: “There will be no countries that attain symmetrical organization of all groups with a common interest and thereby attain optimal outcomes through comprehensive bargaining.”

That quotation comes from “The Rise and Decline of Nations,” Olson’s 1982 sequel to “The Logic of Collective Action.”

This ominously titled book begins with Olson’s observation that West Germany, successor to a state literally destroyed in 1945, was faring better, economically and socially, than its conqueror, Britain.

His paradoxical, and deeply depressing, conclusion: Political stability is a curse of sorts, because, over time, stable societies accumulate interest groups, with all the distortion and complexity that breeds. “On balance,” he wrote, “special-interest organizations and collusions reduce efficiency and aggregate income ... and make political life more divisive.”

The problem is not, as the president implied, the opposition of an implacable few to the manifest general interest.

Rather, it is that Washington is besieged by mutually offsetting lobbies representing almost every conceivable segment of society. Some (e.g., teacher unions) collect under the Democratic Party banner; some (e.g., independent oil operators) tilt Republican; and many (Wall Street, agribusiness, hospitals) have their hooks in both parties.

As Olson warned, our stable democracy suffers from “crowded agendas and bargaining tables” — too crowded to agree on the problem, much less a solution. Or so the repeated failure to strike a “grand bargain” on fiscal policy would suggest.

Obama was surely right to maintain that there is such a thing as a public good: infrastructure, social equality, national and global security. He was also right that government is better suited than markets to provide some of these.

But the president’s paean to collective action lacked Olson’s realism. The question is not just how much more government we need or want, if any. It’s also how much more government we can afford, in light of its purposes and given the risks Olson identified.

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